Business Chapter #6 Notes.doc

Chapter 6 – Developing and Promoting Goods and Services (pg. 132-
146)
Promotion – Any technique designed to sell a product. It is part of the communication mix: the
total message a company sends to consumers about its product.
The two general values to be gained from any promotional activity, regardless of the particular
strategy or tools involved: communicating information and creating satisfying exchanges.
From an information standpoint, promotions seek to accomplish four things with potential
customers:
- Make them aware of products
- Make them knowledgeable about products
- Persuade them to like products
- Persuade them to purchase products
The ultimate objective of any promotion is to increase sales. However, marketers also use
promotion to communicate information, position products, add value, and control sales volume.
Product Positioning – The establishment of an easily identifiable image of a product in the minds
of consumers
Today’s value conscious customers gain benefits when the promotional mix is shifted so that it
communicates value – added benefits in its products.
Push Strategy – A promotional strategy in which a company aggressively pushes its product
through wholesalers and retailers, which persuade customers to buy it.
Pull Strategy – A promotional strategy in which a company appeals directly to customers, who
demand the product from retailers, which demand the product from wholesalers
There are four types of promotional tools: advertising, personal selling, sales promotions, and
publicity and public relations. The best combination of these tools – the best promotional mix –
depends on many factors. The most important is the target audience.
In establishing a promotional mix, marketers match promotional tools with the five stages in the
buyer decision process:
1. Buyers must first recognize the need to make a purchase. At this stage, marketers must
make sure that buyers are aware of their products. Advertising and publicity, which can
reach many people quickly, are important
2. Buyers also want to learn more about available products. Advertising and personal selling
are important because both can be used to educate consumers 3. Buyers compare competing products. Personal selling can be vital. Sales representatives
can demonstrate product quality and performance in comparison with competitors’
products.
4. Buyers choose products and purchase them. Sales promotion is effective because it can
give consumers an incentive to buy. Personal selling can help by bringing products to
convenient purchase locations
5. Buyers evaluate products after purchase. Advertising, or even personal selling, is
sometimes used to remind consumers that they made wise purchases.
Advertising – Promotional tool consisting of paid, non-personal communication used by an
identified sponsor to inform an audience about a product
Informative Advertising – An advertising strategy, appropriate to the introduction stage of the
product life cycle, in which the goal is to make potential customers aware that a product exists
Persuasive Advertising – An advertising strategy, appropriate to the growth stage of the product
life cycle, in which the goal is to influence the customer to buy the firm’s product rather than the
similar product of a competitor
Comparative Advertising – An advertising strategy, appropriate to the maturity stage of the
product life cycle, in which the goal is to influence the customer to switch form a competitor’s
similar product to the firm’s product by directly comparing the two products
Reminder Advertising – An advertising strategy, appropriate to the latter part of the maturity
stage of the product life cycle, in which the goal is to keep the product’s name in the minds of
customers
Advertising Medium – The specific communication device – television, radio, newspapers, direct
mail, magazines, billboards – used to carry a firm’s advertising message to potential customers
Types of media advertising include, newspapers, television, direct mail, radio, magazines, word
of mouth, outdoor advertising, the internet, virtual advertising
Direct Mail – Printed advertisements, such as flyers, mailed directly to consumers’ homes or
places of business
Word Of Mouth – opinions about the value of products passed among consumers in informal
discussions
Ecommerce – Buying and selling processes that make use of electronic technology
Internet Marketing – The promotional efforts of companies to sell their products and services to
consumers over the internet
Internet advertising offers advantages for both buyers and sellers. For buyers, advantages include
convenience, privacy, selection useful information, and control. For sellers, advantages include
reach, direct distribution, reduced expenses, relationship building, flexibility, and feedback. While internet marketing has some obvious advantages for both buyers and sellers, it also has
weaknesses, including profitability problems, information overload, and limited markets.
Media Mix – The combination of media through which a company chooses to advertise its
products
Regardless of the media used, advertisements fall into one of several categories
Brand Advertising – Advertising that promotes a specific brand name product
Product Advertising – A variation on brand advertising that promotes a general type of product
or service
Advocacy Advertising – Advertising that promotes a particular viewpoint or candidate
Institutional Advertising – Advertising that promotes a firm’s long term image, not a specific
product
Retail Advertising – Advertising by retailers designed to reach end-users of a consumer product
Co-operative Advertising – Advertising in which a manufacturer together with a retailer or a
wholesaler advertise to reach customers
Trade Advertising – Advertising by manufactures designed to reach potential wholesalers and
retailers
Industrial Advertising – Advertising by manufacturers designed to reach other manufacturers’
professional purchasing agents and managers of firms buying raw materials or components
Advertising Campaign – The arrangement of ads in selected media to reach target audiences
A campaign typically includes six steps:
1. Identifying the target audience
2. Establishing the advertising budge
3. Defining the objectives of the advertising messages
4. Creating the advertising messages
5. Selecting the appropriate media
6. Evaluating advertising effectiveness
Advertising Agencies – A firm that specializes in creating and placing advertisements in the
media for clients
Personal Selling – Promotional tool in which a salesperson communicates one-on-one with
potential customers Sales Force Management – Setting goals at top levels of an organization; setting practical
objectives for salespeople; organizing a sales force to meet those objectives; implementing and
evaluating the success of a sales plan
Managers of both telemarketers and traditional salespeople must consider the ways in which
personal sales activities are affected by the differences between consumer and industrial
products:
- Retail selling is selling a consumer product for the buyer’s personal or household use
- Industrial selling is selling products to other businesses, either for the purpose of
manufacturing other products or for resale
Improving sales efficiency requires marketers to consider salespeople’s tasks. Three basic tasks
are generally associated with selling: order processing, creative selling, and missionary selling.
Sales job usually require salespeople to perform all three tasks to some degree, depending on the
product and the company.
Order Processing – In personal sales, the receiving and follow through on handling and delivery
of an order by a salesperson
Creative Selling – In personal sales, the use of techniques designed to persuade a customer to
buy a product when the benefits of the product are not readily apparent or the time is very
expensive
Missionary Selling – In personal sales, the indirect promotion of a product by offering technical
assistance and/or promoting the company’s image
Prospecting – In personal sales, the process of identifying potential customers
Qualifying – In personal sales, the process of determining whether potential customers have the
authority to buy and the ability to pay for a product
The approach refers to the first few minutes that a salesperson h